Allen Stanford Convicted In $7 Billion Ponzi Scheme

If it wasn’t for Bernie Madoff, R. Allen Stanford would probably be the world’s most infamous Ponzi schemer. But a Texas jury on Tuesday still found Stanford guilty of committing a $7 billion fraud, convicting him on 13 of 14 counts alleged by federal prosecutors.

By any standard, Stanford’s Ponzi scheme was massive. The chairman of Stanford Financial Group, an offshore bank based in Antigua, orchestrated the 20-year fraud by selling certificates of deposit, pocketing some of the proceeds and using the rest to invest in dubious real estate deals, his own business ventures and cricket tournaments.

For a short while the outcome of the Houston trial was in doubt after the jury on Monday informed the federal judge in the case they were unable to reach a unanimous verdict on all 14 counts. But the jury deliberated late Monday night and returned on Tuesday with a verdict of guilty on all counts except for the government’s allegation of wire fraud.

Stanford, 61, denied any wrongdoing and blamed his ex-chief financial officer for the fiasco at his bank, but federal prosecutors claimed during the trial that Stanford used the bank “as his own personal ATM.” Stanford did not testify in his defense and he had so little cash left that he relied on court-appointed lawyers.

The conviction of Stanford brings to an end the U.S. government’s prosecutions of financiers whose large Ponzi schemes unraveled during the credit crisis. Madoff, Stanford, Tom Petters ($3.7 billion Ponzi), Scott Rothstein ($1.2 billion Ponzi) and Marc Drier ($400 million), had nothing to do with the financial shenanigans that brought the U.S. financial system to its knees. Still, they somehow typified the culture of leverage and investor gullibility that nearly destroyed the U.S. economy.

Just about nobody who played a role in the financial sector’s collapse has been found guilty of committing a crime, but Allen Stanford will spend as much as 20 years in jail—maybe even more. His story is also an affirmation of the regulated U.S. banking system—where certificates of deposit are federally insured.